Phoenix, Arizona, known for its sunshine and warmth, is getting particularly hot according to Mesa West Capital, a top US non-bank commercial real estate lender that is bullish on the so-called Valley of the Sun.
The firm recently provided two five-year, floating rate, non-recourse loans totaling more than $73 million on multifamily communities in the Phoenix area: a $49.8 million first mortgage to Optima and DeBartolo Development to refinance Optima Sonoran Village in Old Town Scottsdale, and a $23.5 million first mortgage to a joint venture led by Sunroad Enterprises to finance the acquisition of the Sonoma Ridge Apartments.
“The demand in Phoenix continues to grow,” Mesa West VP Jason Bressler, who originated the loan out of the firm’s Los Angeles office, told Real Estate Capital. “A lot of jobs continue to be created, real estate fundamentals are still improving and new apartment supply is coming in at or above proforma rents.”
The Optima Sonoran Village is secured by the 206-unit first phase of a planned three-phase, high-rise Class A community at 6895 East Camelback Road, across from the two-million sq ft Scottsdale Fashion Square, a “luxury” regional mall.
Bressler called the deal an “opportunity to make a loan on a top tier asset in an affluent market with strong and experienced sponsorship.” The Old Town Scottsdale boasts the highest rents in the region, but Mesa West continues to believe that fundamentals will continue to improve, Bressler said.
The Sonoma Ridge Apartments is a 240-unit community in the suburb of Peoria. San Diego-based Sunroad’s partners on the acquisition are Security Properties and Loma Linda University. The property features 18, two-story buildings on a 14.7-acre site at 8201 West Beardsley Road. A multi-million capital improvement program is underway and will include significant interior unit, exterior and amenity renovations.
“There is still a lot of opportunity for the owners to execute value-add business plans,” Bressler said. He stressed that the firm is making a concerted push into Phoenix across major property types. HFF arranged the financing.